KEY POINTS
- Brent crude climbs to $64.02 a barrel as US Senate moves closer to reopening government.
- Market optimism offsets worries over growing global oil supply and rising US inventories.
- Sanctions, shipping disruptions and exemptions for Hungary add further volatility to trade flows.
Oil prices gained on Monday as signs emerged that the prolonged US government shutdown could soon end, fuelling optimism about renewed demand from the world’s largest consumer of crude. The relief in markets came as the Senate advanced legislation that may reopen the government after a record 40 days of partial closure.
Brent crude futures rose 39 cents to $64.02 a barrel by 7:51 a.m. GMT, while US West Texas Intermediate climbed 43 cents to $60.18. The modest uptick follows two straight weeks of declines triggered by supply concerns and sluggish global consumption.
Tony Sycamore, market analyst at IG, said the likely reopening would “restore pay to 800,000 federal workers and restart vital programmes that should lift consumer confidence, activity and spending.” The renewed sentiment, he added, could nudge WTI toward $62 a barrel in the near term.
Flight disruptions add uncertainty to Oil demand
Despite the improved tone, analysts remain wary of the broader outlook. The shutdown has already caused widespread operational strain across key sectors, including aviation. More than 2,800 flights were cancelled and over 10,000 delayed on Sunday, the worst disruption since the crisis began. The impact on jet fuel demand, a critical component of US oil consumption, remains a concern for traders.
Brent and WTI both slipped around 2 percent last week as traders weighed the implications of a potential supply glut. OPEC and its partners agreed to slightly raise production in December but decided to pause additional hikes in the first quarter of 2026. Meanwhile, US crude inventories have risen, and oil stored on ships in Asian waters has doubled in recent weeks as Chinese and Indian refiners cut back on Russian imports amid tightening Western sanctions and limited import quotas.
Indian refiners have increasingly turned to suppliers in the Middle East and the Americas to fill the gap left by restricted Russian cargoes.
Russian producer Lukoil faces fresh turbulence as a US-imposed deadline nears for companies to sever business ties with the firm. Hopes of a rescue deal with Swiss trader Gunvor collapsed, leaving the company scrambling to manage its overseas operations.
Adding to global supply jitters, Washington granted Hungary a one-year exemption from sanctions on Russian oil imports. While intended to stabilise Hungary’s energy supply, analysts warned the move could further tilt the balance toward oversupply in global markets.
Even so, traders are betting that an end to the US shutdown could provide just enough lift to offset some of those pressures, at least in the short term.
